Can IT Open New Sources Of Revenue?
Every once in a while I get the opportunity to completely immerse myself in one of my client's problems. This time, it was at an IT strategy offsite where a senior director of IT asked me one simple question: "How can we use information technology to help our company open up new streams of revenue?" I found the question refreshing, mainly because nine out of ten CIOs I talk to these days ask the opposite: "how can IT reduce costs?"
Fortunately for me, this client had invited lots of smart people from business and IT and outside experts into the room for two days to explore the revenue question. Challenges familiar to most life sciences companies got folks in the room in the first place: patent expiration foretold eroding profit margins for their blockbuster drugs, and expansion into emerging markets was an avenue for growth, yet one fraught with complexity and uncertain returns.
So this group's charter was to think digital.
Taking inspiration from morning TED talks, four working teams presented ideas for revenue opportunities created by emerging technologies in tech markets like mobile, big data, security, and consumer experiences. The teams cited creative ideas — like algorithms that use public data sources to reduce production forecast variance and improve distribution allocations; modern IT security models, pioneered in financial services, that would enable them to cut the time it takes to on-ramp a new manufacturing partner from months to weeks; company-owned data that could be sold or licensed and made available through public APIs to third parties; and many more.
The teams shared inspiring ideas that were big enough and bold enough to at least warrant further investigation.
But as often happens in IT strategy discussions, there were debates aplenty that got mired in the barriers the current IT organization faced in incubating and ultimately commercializing nascent revenue-generating ideas. Topping the list: Rigid contracts with outsourced providers hampered innovation and speed. Low, no, or shrinking budgets. Limited insight into end-customer needs. Aging systems that vacuum up already scarce resources. Internal IT talent drain wrought by years of outsourcing. And many, many more.
These barriers haunt many large IT shops, I find.
Reflecting on the offsite, there were three things that separated the successful and unsuccessful presentations as workgroups pitched ideas to a panel of business executives and outside experts. The successful teams:
- Framed all IT barriers around the impact they had on customers. The IT leaders who looked at problems through the eyes of the end customer garnered far more influence and support from the audience than those who looked at problems through the eyes of IT.
- Told stories about revenue opportunities through imagery. Something that's easily forgotten amidst the engineering culture of IT — the standout IT leaders were those that could mask IT complexity through imagery, and tell visual stories that cut right to commercial opportunity. (Not a single architectural diagram made its way into the highest-impact pitches.)
- Used facts and data to quantify their assertions. While many of these IT folks were clearly uncomfortable using data — like consumer health technology trends and business technology adoption trends — to bolster their arguments, those that did clearly garnered trust among business leaders weighing which investments made sense to explore further.